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Govt plan to liberalize retail shelf space fee faces backlash from MSMEs
Proposed changes to a Trade Ministry regulation would revoke a price cap for listing of products at retailers, which micro, small and medium enterprises (MSMEs) fear will only benefit suppliers with large capital at hand.
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A man buys rice in a shopping center in Serpong, Banten, on March 19, 2020. Retailers and distributors limited purchase volumes of basic goods at the time to ensure the availability of supplies in the early phase of the COVID-19 pandemic. (JP /Berto Werdhatama)
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government plan to revoke a price cap for product displays in shops has caused a stir among micro, small and medium enterprises (MSMEs), which fear the policy will only benefit suppliers with large capital at hand.
Under the prevailing rules, the government allows retailers to charge suppliers – whether MSMEs or big corporations – no more than 15 percent to have their products displayed on shelves.
That figure had remained unchanged since 2013, despite legal revisions in 2014 and May 2021 that resulted in Trade Ministry Regulation No. 23/2021.
However, the government recently announced amendments to replace the 15 percent cap with a market-based mechanism, meaning the cost for suppliers could go up or down following the laws of supply and demand.
Ikhsan Ingratubun, the chairman of the Indonesian MSME Association (Akumindo), contested the plan, arguing that retailers might set prices arbitrarily, which could lead to steep listing fees. He feared MSMEs would be unable to afford the fees, inhibiting their market access.
The bill to amend Trade Ministerial Regulation No. 23/2021 also concerns provisions on fines for retailers who owe payments to MSMEs, as well as suppliers who fail to provide goods on time. Ikhsan said removing the former would put MSMEs in a vulnerable position, as they could do nothing about payment delays from retailers.
“If the government allows deregulation according to the market's wishes, [small businesses] will surely die. What can we do?” Ikhsan told The Jakarta Post on Monday.
